Epidermal growth factor receptor (EGFR) is extensively expressed in head and neck cancer. However, EGFR-targeted therapy has only modest efficacy in head and neck cancer, through mechanisms that are not fully understood. Here, we found that inhibition of EGFR by erlotinib stimulated phosphorylation and activation of STAT3 leading to increased Bcl2/Bcl-XL expression in head and neck cancer cells, which may dampen the therapeutic efficacy of erlotinib against head and neck cancer. Erlotinib-enhanced STAT3 phosphorylation results, at least in part, from suppression of its physiological phosphatase, PTPMeg2. Specific knockdown of STAT3 by RNA interference significantly sensitized head and neck cancer cells to erlotinib treatment. Pharmacological inhibition of STAT3 by niclosamide not only blocked erlotinib-stimulated STAT3 phosphorylation but also synergistically repressed head and neck cancer growth in vitro and in vivo. Combined inhibition of EGFR and STAT3 by erlotinib and niclosamide more effectively induced apoptosis in tumor tissues without toxicity for normal tissues. Based on our findings, treatment with erlotinib combined with niclosamide may offer an effective therapeutic approach to improve the prognosis of head and neck cancer.